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Bill Ackman has cut the amount he is seeking to raise in the initial public offering of his US investment fund Pershing Square USA to $2bn, a fraction of the $25bn the billionaire hedge fund manager had initially targeted.
The reduction in the fundraising target is the second in a matter of days for one of the highest-profile investors on Wall Street, and follows an unexpected delay last week caused by a letter Ackman sent to investors in his hedge fund, Pershing Square Capital Management.
Ackman has become a prominent figure on social media, with more than 1mn followers on X. Earlier this month, he endorsed Republican presidential nominee Donald Trump on the platform.
But the billionaire hedge fund manager has had to scale back plans to capitalise on that following by more than 90 per cent.
Had he succeeded in launching a $25bn closed-end fund, it would have made Pershing Square USA one of the largest IPOs of all time. In last week’s letter to investors, however, Ackman revised that down to between $2.5bn and $4bn.
Pershing Square Capital Management, which will manage the investments in the US-listed fund as well as its European counterpart, will contribute $500mn to the offering as the anchor investor, according to a filing published on Tuesday.
The billionaire investor last month raised just over $1bn by selling a 10 per cent stake in the hedge fund to a group of investors including Israeli insurance company Menora Mivtachim and Brazil’s BTG Pactual. Ackman said some of that money would be used towards setting up Pershing Square USA.
The hedge fund’s participation implies that Ackman now expects to attract about $1.5bn from outside investors.
Two people familiar with the matter said that one of the investors that Ackman had last week held out as planning to anchor the float, the Baupost Group, had decided not to take part after its participation was made public in Ackman’s letter. Baupost declined to comment.
The letter also prompted banks to push back the timetable for the listing, as they waited to see if it raised red flags with the Securities and Exchange Commission over allusions to trading activity after the IPO launch.
The billionaire had pushed investors to place their orders with the banks underwriting the deal, writing last week that it was “very important that the banks get a sense that a deal’s momentum is building” so that they could relay that to the “capital markets desks of every institutional investor”.
Pershing Square USA said in an SEC filing published on Tuesday that it would press ahead with a sale of its shares on the New York Stock Exchange “as soon as practicable”.
A person familiar with the matter said that pricing of the closed-end fund was now expected to take place on August 5, with trading due to begin the following day. The SEC had given the green light to the IPO on Monday evening, another person familiar with the process said.
Ackman has bet on retail traders to back the listing. He has said in recent weeks that his “notoriety” on social media would give the public listing an additional boost, and could even make the fund trade at a premium to its net asset value.
But the investor letter from Ackman revealed that investors had expressed concerns about the proposed US listing, including over his claims that the fund would trade at a premium.
A person close to Pershing Square USA said that launching the fund at a smaller size would assuage concerns from big investors that the stock would not trade well after launch. His London and Amsterdam-listed vehicle, Pershing Square Holdings, has traded at a persistent discount.
The banks leading the deal include Citigroup, UBS, Bank of America and Jefferies.
